Understanding the difference between card-present and card-not-present (CNP) transactions is key to managing risk, processing fees, and compliance. This article explains the two types and what they mean for your business.
What is a Card-Present Transaction?
A card-present transaction occurs when the cardholder is physically present and uses their card at a terminal to complete the payment.
Examples:
- Swiping, inserting, or tapping a credit or debit card at a POS terminal
- Paying with a mobile wallet (e.g., Apple Pay, Google Pay) via NFC
- Using a smart terminal to scan a QR code in person
Benefits:
- Lower risk of fraud
- Typically lower processing fees
- Easier to verify customer identity
What is a Card-Not-Present (CNP) Transaction?
A card-not-present transaction happens when the cardholder does not physically present their card. Instead, they enter their card details manually online or over the phone.
Examples:
- Online checkout or e-commerce orders
- Phone or email payments via Virtual Terminal
- Recurring billing or subscription payments
- Invoicing with card payment links
Considerations:
- Higher risk of fraud and chargebacks
- May require additional verification (CVV, 3DS, billing zip)
- Slightly higher processing fees due to increased risk
Reducing Risk in CNP Transactions
- Use verified and encrypted checkout pages
- Enable 3D Secure (3DS) where available
- Collect accurate billing and contact information
- Monitor for unusual or high-value activity
Why It Matters
- Your merchant account may have different limits, fees, or security protocols for each transaction type.
- Knowing the difference helps you choose the right tools—like Smart POS for in-person, or Virtual Terminal and Checkout Pages for remote.
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